Your Friday Weekly Mortgage Update
This week we saw the continued effect of uncertainty in the world with the devastation in Japan, the civil war in Libya, and the continued protests in Bahrain. Uncertainty creates fear. Fear pushes people to look for safety. And safety resides in the US Bond market. As I said last week, the ‘flight to safety' effect is keeping a lid on interest rates.
But this is temporary and if you want to know what's in store for rates, look at the economy. Manufacturing is doing well, both the producer and consumer price index came in this week well above last year, and the Fed came out this week with bullish statements on the economy. All of this is inflationary. And as we've said before, as inflation increases, so do rates.
There are those who point to the pull back in stocks and the increase in consumer prices and say we're headed for a double dip recession. But Chase, Wells Fargo, US Bancorp and BB&T ALL increased their dividends today. I don't think they wouldn't be letting go of their money if they didn't feel good about where things are headed. But for now, tell your clients to GRAB this temporary dip in rates.
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